|Foresight Update 10 - Table of Contents|
We need to evolve better fact-finding institutions to speed
the growth of foresight. A better way for people to "stake
their reputations" might help.
At present, when a technological question becomes a matter of public concern, advocates often engage in a trial by media combat. Opposing experts fling sharp words, and accuse each other of bias and self-interest. Debates quickly descend into hyperbole and demagoguery. Paralysis or folly often follows, seriously undermining our ability to deal with important issues like space development, nuclear energy, pesticides, and the greenhouse effect. Greater issues lie ahead, such as nanotechnology, where the consequences of such folly could be devastating.
We want better institutions for dealing with controversies over science facts, so we can have better inputs for our value-based policy decisions. Yes, with enough study and time, most specific science questions seem to get resolved eventually. But we want to form a consensus more quickly about which facts we're sure of, and what the chances are for the rest. Rather than depending on the good nature of the people involved, we want explicit procedures that provide a clear incentive for participants to be careful and honest in their contributions. And we want as much foresight as possible for a given level of effort, with the temporary consensus now correlating as closely as possible with the eventual resolution later.
One institution for doing all this is the "fact forum" (or "science court"), proposed by Arthur Kantrowitz. In this, competing sides would agree to an impartial but technically knowledgeable jury, present their cases, and then submit to cross-examination. The jury isolates areas of agreement as specifically as possible, and writes a summary at the end. Advocates not willing to submit their claims to such criticism are to be discounted. This is a clever suggestion, worthy of attention and further exploration.
Even so, I would like to offer an alternative proposal, and encourage people to think up yet more ideas. Fact forums have problems which alternative institutions might be able to remedy. Forum participants have an incentive to avoid making claims that will look silly under cross-examination, but as every lawyer knows, that is not the same as trying to get the truth out. Debates favor articulate intellectuals over those with good "horse-sense." Who should get to represent the different sides for questions of wide interest? What if few potential jurors are both knowledgeable and impartial? These ambiguities, and the non-trivial costs involved, give excuses for the insincere to decline participation.
In contrast, the alternative I will describe can, for a well-posed question, create a consensus that anyone can contribute to, with less bias against the inarticulate. It offers a clear incentive for contributors to be careful, honest, and expert. Such a consensus can come much cheaper than a full debate, and once created can continuously and promptly adjust to new information. Any side can start the process, and leave the resulting consensus as an open challenge for other sides to either accept or change by participating. And there is reason to believe that such a consensus will express at least as much foresight, as defined above, as any competing institution.
You may be skeptical at this point. But, in fact, similar institutions have functioned successfully for a long time, and are well-grounded in our best theories of decision. I'm talking about markets in contingent assets, more commonly known as "bets." Bets have long been seen as a cure for excessive verbal wrangling; you "put your money where your mouth is." I propose we create markets where anyone can bet on controversial scientific and technological facts, and that we take the market odds as a consensus for policy decisions.
Can this make any sense? Consider how it might work. Imagine (hypothetically, of course) that there was a disagreement on whether a programmable nanoassembler would be developed in the next twenty years, and that policy makers were in danger of not taking this possibility seriously enough. What could markets do?
Policy makers could take the position that they don't know much about technology, or even about who the best experts are. They would simply use the market odds in making policy decisions. If some market said there was a 20% chance of nanoassemblers by 2005, policy makers might decide the issue was serious enough for them to set up their own market. They would carefully form a claim to bet on, such as:
By 2005, there will be a device, made to atomic specifications, fitting in less than 1 cubic mm, able to run C programs requiring 10MB memory at 1 MIPS, and able to replicate itself in less than one year from a bath of molecules, each of which has less than 100 atoms.
They would choose a procedure for selecting judges to decide the question in 2010, and a financial institution to "hold the stakes" and invest them prudently. And then a market would be set up, where offers to trade would be matched; policy makers could even subsidize the market to encourage participation.
Ordinary people could take the attitude that those who claim the consensus is mistaken should "put up or shut up" and be willing to accompany claims with at least token bets. (Statistics about how well people do could then be compiled.) When people on the "pro" side buy bets, they would drive the consensus price up, toward what they believe. "Con" people would have to accept this or buy compensating bets to push the consensus down; they could not just suppress the idea with silence.
|Offers an incentive for care, honesty and expertise|
If the different sides soon came to largely agree, they could
gradually sell and leave the market, leaving the consensus
standing. Judges need only be paid when they actually judge, and
incentives to "settle out of court" (not described
here) can make the need for formal judging rare. Thus, even
obscure questions could afford expensive judging procedures.
Individuals or groups who believe they have special insight could use it to make money if they were willing to take a risk. Arbitragers would keep the betting markets self-consistent across a wide range of issues, and hedgers would correct for various common human biases, like overconfidence. Traders could base their trades on the results of other relevant institutions, like fact forums, and so the markets should reflect the best insights from all co-existing institutions.
Risk reduction, i.e. insurance, is also possible. Policy bodies and anyone else could bet that things will go against them, and so be less sensitive to uncertainties surrounding, for example, a nanoassembler breakthrough.
Of course, like fact forums, betting markets have problems and limitations. There is no escaping the costs of thinking carefully about what exactly one is claiming; a clearly worded claim is much easier to judge impartially. Science bets can take longer than most to resolve, making investments in them less attractive. There are tradeoffs in how long to wait to resolve a bet, and in how many variations on a question can be supported.
"Moral hazard," where someone might do harm to prevent a claim like "A person on Mars by 2030" just to win a bet, should be avoided. Judges should be kept impartial, though judging in hindsight should be easier than foresight. Market procedures should discourage conflict-of-interest cheating, such as brokers who trade for both others and themselves. Perhaps most limiting, explicit betting markets on science questions seem to be legal only in the U.K.
Some apparent problems are really not problems. Markets may look like opinion polls where any fool can vote and the rich get more votes, but they are actually quite different. In practice, markets like corn futures are dominated by those who have managed to play and not go broke. Explicit betting markets cannot be cornered or monopolized. So, rich people who bet large sums carelessly or insincerely give their money away to those with better information. If word of this behavior gets out, they lose this money quickly, as anyone can make money by correcting such a manipulation.
While betting markets may be untried as a way to deal with policy-related fact disputes, they are not untried as a human institution. Bets are a long-established reputation mechanism and phrases like "you bet" are deeply embedded in our language. Scientists have been informally challenging each other to reputation bets for centuries, with a recent wave of such bets about "cold fusion." Illegal sports betting markets are everywhere, and England has had science betting markets for decades. Many people there won bets on the unlikely claim that men would walk on the Moon.
Since June 1988, astrophysicist Piers Corbyn has bet to gain publicity for his theory of long-term weather prediction, betting against London bookies who use odds posted by the British Meteorological Service. Over the last six months alone, there is less than a one in 1010 chance of someone randomly winning his 25 bets a month at his over-than-80% success rate. Yet the Service still refuses to take Piers seriously, or to bet against him. Bookies have taken on the bets for the publicity, but are tired of losing, and have adjusted their odds accordingly. These are the odds that should be used for official British agricultural policy.
Betting markets are also well established in economic theory. A standard way to analyze financial portfolios is to break them into contingent assets, each of which has value in only one possible world. In fact, stock and other securities markets can be considered betting markets relative to the return one can get by buying the "market" asset. A "complete market"--where one can bet on everything--is best, allowing investors to minimize risk and maximize expected return. Explicit betting markets, usually on elections, are widely used to teach MBA students about markets, and one experimenter claims they predict the final vote tallies better than national polls.
A famous economics article argues that Eli Whitney would have benefited more from his cotton gin by speculating in cotton-bearing land than by trying to enforce his patent. Finally, in the presence of betting markets, perfect decision theory agents will make all external actions as if they agreed with the market odds, making those odds a real "consensus."
Our biggest problem may be how we solve problems. I suggest that policy makers would do well to use estimates on technology issues that are as unbiased and predictive as the odds at most any racetrack. If you agree, help me find a way to give the idea a try.
K.E. Drexler, Engines of Creation, Doubleday, New
"Feedback Column," New Scientist, 7/14/90. See also 2/10, 6/23, 7/28.
R. Forsythe, F. Nelson, G. Neumann, J. Wright, "The Explanation and Prediction of Presidential Elections: A Market Alternative to Polls" Economics Working Paper 90-11, U. of Iowa, Iowa City, 4/12/90.
R. Hanson, paper to appear in Proc. Eighth International Conference on Risk and Gambling, 8/90.
J. Kadane, R. Winkler, "Separating Probability Elicitation from Utilities," Journal of American Statistical Association, June 1988, 83(402), Theory and Methods, pp. 357-363.
J. Hirshleifer, "The Private and Social Value of Information and the Reward to Inventive Activity," American Economics Review, 61(4), Sept. 1971, pp. 561-74.
W. Sharpe, Investments, 3rd Ed., Prentice Hall, NJ, 1985.
Robin Hanson researches artificial intelligence and Bayesian statistics at NASA Ames, has master's degrees in physics and philosophy of science, and has done substantial work on hypertext publishing. To receive his longer paper on the above topic, send us a self-addressed envelope (with 45 cents postage within the US), or send electronic mail to email@example.com.
For current information and more on idea futures, see Robin Hanson's Home Page and Idea Futures - The Concept.
For reader response to this article, see Update 11.
Foresight Update 10 - Table of Contents
Economics of the Information Age: the Market Process
Approach, an Agorics Project Seminar Series, Sept.
11-Dec. 9, 1990. Sponsored by the Center for the Study of Market
Processes, George Mason University, Fairfax, VA. Contact
Compcon, Feb. 26-28, 1991, San Francisco, sponsored by IEEE. Includes plenary talk on nanotechnology, Feb. 26, 9:30 AM. Contact Michelle Aden, 408-276-1105.
Molecular Graphics Society Meeting, May 14-17, 1991, University of North Carolina, Chapel Hill, NC. Interactive graphics, presentation graphics, interfaces networking, novel display techniques; includes vendor exhibition. Contact Molecular Graphics Conference Office, c/o Dr. Frederick P. Brooks, Jr., Dept. of Computer Science, University of Computer Science, Univ. of NC, Chapel Hill, NC 27599-3175.
Space Development Conference, May 22-27, 1991, Hyatt Regency, San Antonio, TX, sponsored by National Space Society, Southwest Research Institute. Cosponsored by Foresight Institute. Will have a session and possibly a workshop on nanotechnology. Talk abstracts due Nov. 15 to Bob Blackledge, 719-548-2329. Register before Jan. 1 at cosponsor rate of $60: contact Beatrice Moreno, 512-522-2260.
STM '91, International Conference on Scanning Tunneling Microscopy, August 12-16, 1991, Interlaken, Switzerland. Contact Ch. Gerber, fax (1) 724 31 70.
Second Foresight Conference on Nanotechnology, Nov. 1991, a technical meeting sponsored by Foresight Institute, Stanford Dept. of Materials Science and Engineering, University of Tokyo Research Center for Advanced Science and Technology. Dates and details to be determined; please wait for future announcements.
Science and Technology at the Nanometer Scale, American Vacuum Society National Symposium, Nov. 11-15, 1991, Seattle, WA. See STM '90 article elsewhere in this issue.
From Foresight Update 10, originally published 30 October 1990.
Foresight thanks Dave Kilbridge for converting Update 10 to html for this web page.
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